New home sales decline slightly in January; Inventory of new homes to lowest level in over a year

dennis-norman-st-louis-realtor-real-estate-new-home-salesToday, the U.S. Department of Housing and Urban Development and U.S. Census Bureau released new home sales data for January 2012 showing a decrease of 0.9 percent from the month before, and an increase of 3.5 percent from a year ago. The seasonally-adjusted new home sales rate for January was 321,000 homes, down from an adjusted rate of 324,000 homes the month before. This is the first month new home sales have declined after four consecutive months of increases.

The supply of new homes on the market decreased to a 5.6 month supply from 5.7 months the month before. The median new home price increased slightly for the month to $217,100 from a revised median price of $216,500 the month before but decreased 9.6 percent from a year ago when the median new home price was $240,100.00.

My Mantra

As has been my long-running mantra, I don’t like “seasonally adjusted” numbers and “rate” of sales. Why, for one I can’t figure out how in the world they compute the numbers. Second, I just don’t think discussing the “rate” of new home sales paints a realistic picture of the market.

Here is the raw data, the ACTUAL new homes sold- no fluff, no “adjusting” For January 2012:

  • 22,000 new homes sold, down from 23,000 the month before but up from 21,000 a year ago.
    • As usual, the South had the majority of the new home sales with 13,000 this month (59 percent of the total in US)
    • the west region had 5,000 new homes sold.
    • the Midwest had 2,000 new homes sold.
    • The Northeast had 1,000 new homes sold.
  • New Homes in the US in sold during the month been for sale for a median time of 7.1 months since the homes were completed, up from 6.8 months the month before.

What’s in store for 2012?

Well, this one is a tough one….While I am confident we are going to see an increase in home sales from 2011, I’m just not thinking it’s going to be much. On the good side of things, mortgage delinquency rates and foreclosure rates are trending downward and new home inventories are declining however, on the bad side, prices are still depressed to the point that there is a significant premium for a new home. Therefore, I’m going to forecast a modest increase and am expecting to see somewhere between 304,000 – 334,000 new homes sold in 2012.

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